Preventing Rental Fraud (전세 사기 예방)

It is impossible to prevent rental fraud completely. However, it is important to know at least some important information when signing a real estate lease contract.

 

1. Avoid homes with high loan-to-value ratios.

If a landlord who owns a house has acquired the house through “gap speculation,” meaning that the majority of the bank loan and the deposit to enter the house were paid, and the landlord's own money is very little, it can be risky to rent the house. For example, if the house price is 500 million won and the bank loan is 200 million won, and my lease deposit is 200 million won, then the landlord's own money is only 100 million won. In this case, if the house goes to auction, it is possible that the tenant will not be able to get the lease deposit back due to the bank loan. It is recommended not to sign a contract for a house that the landlord's own money is only about 20%. You can check rental information for Jeonse and monthly rent in the area you want to rent on the “Real Transaction Price Disclosure System of the Ministry of Land, Infrastructure, and Transport (http://rt.molit.go.kr/).” At this time, you can check whether the deposit was set below the appropriate ratio compared to the sale price.

 

2. You must check the real estate registration certificate(부동산 등기부등본, 등기사항증명서).

The registration certificate is a registration copy. There are all and some registration certificates. It is recommended to confirm whether the issued certificate is a "full" registration certificate, which displays all related contents. The fee for viewing is 700 won. Usually, real estate agencies provide it, but it is also a good idea for the tenant to get it issued directly. It is a good idea to check it step by step before signing a real estate contract, before paying the contract deposit, before paying the mid-term payment, before paying the final balance, etc. because the date of accepting registration and the date of recording are different. There may be a registration certificate that records the land and buildings together, or a registration certificate that records the land and buildings separately. If the land and the building are separate, it is recommended to check each registration certificate.

 

3. Before signing a contract, it is important to check if it is possible to enroll in a security deposit return guarantee insurance.

You can enroll in the insurance through the Korea Housing and Urban Guarantee Corporation (HUG), Seoul Guarantee Insurance (SGI), Korea Housing Finance Corporation (HF), etc. If you can confirm that you can enroll before signing the contract, you can sign with some peace of mind. After enrolling in the security deposit return guarantee insurance, it is recommended to inform the insurance company of any important changes related to the property. If important contract conditions such as renewal of the lease agreement or expiration of the preemptive rights change, it is necessary to inform the insurance company. If you do not, you may not be able to get your deposit back through the insurance. During the contract period, you should request an explanation of important details from the insurance company and review the terms and conditions.

 

4. You should confirm the landlord and the licensed real estate agent.

It is necessary to check if the landlord is directly signing the contract. You can verify if the property to be rented is owned by the landlord by checking the comprehensive property register certificate again. You need to check the name of the owner recorded in the comprehensive property register certificate and the name and resident registration number on the real estate contract. You can check the licensed real estate agent through the search menu for opening licensed real estate agents within the website of the Korea Association of Realtors (http://www.kar.or.kr/pinfo/brokersearch.asp). You can also find out if the agent belongs to the Korea Association of Realtors. If a licensed real estate agent belonging to the Korea Association of Realtors introduces a fraudulent rental property intentionally or due to negligence, you can receive compensation up to 100 million won.

 

5. You need to report the rental of a house or an apartment(주택 임대차 신고).

If the deposit exceeds 60 million won or the monthly rent exceeds 300,000 won, you can visit the local government center with the contract to report. You can also report online through the Real Estate Transaction Management System (https://rtms.molit.go.kr/) or the Government 24 (https://www.gov.kr/). A call center (1588-0149) is also available for reporting. If you report the rental of a house or an apartment, the confirmation date will be automatically assigned. If you submit the contract while reporting your move, the report will be automatically made. However, if the deposit is less than 60 million won or the monthly rent is less than 300,000 won, it may not be subject to a rental report. However, it is recommended to visit the local government center or report online for the confirmation date and other related matters.

 

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